Would a disabled daughter-in-law be eligible to receive gifts from father-in-law without penalty if he is applying for Medicaid in NY?

He could set up a Special Needs Trust, which would direct funds her way after his death.

Your father-in-law would need to check with the State rules and regulation directed toward Medicaid as each State is different in some aspect. I wouldn't be surprised if Medicaid would still consider anything given to anyone as being a "gift".